In a move critics say is designed to shield the Biden-Harris administration from election fallout, the administration has leveraged taxpayer funds to mask upcoming increases in Medicare premiums.
Under the Inflation Reduction Act (IRA), which was intended to cap out-of-pocket drug costs for Medicare beneficiaries, insurers are poised to significantly hike monthly premiums, with average bids for Part D plans expected to triple by 2025.
In response to potential voter backlash, the Centers for Medicare and Medicaid Services (CMS) rolled out a three-year "demonstration project" to subsidize these premiums, aiming to keep them artificially low. However, despite the appearance of relief, some critics are saying that taxpayers will fund a dramatic increase in subsidies — from $30 per recipient per month in 2024 to $142.70 in 2025 — raising concerns about the long-term impact on government spending and debt.
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Former President Trump advisor Joe Grogan has criticized the maneuver, arguing that it merely shifts costs rather than providing real relief.
"They've destroyed part D premiums," Grogan told Fox News Digital in an interview. "I'm not sure it'll survive legal scrutiny if someone were to sue. Objectively, it shouldn't be done. It's just interjecting $5-10 billion of taxpayer dollars, while the taxpayers are paying the price 85 days before an election. It's sickening."
"This is only going to get worse in 2025, 2026," Grogan continued. "The program is in a death spiral. They announced a three-year demo. It's already broken. The demo is going to fail. Premiums are still going to go up."
Paragon Health Institute, a health care research group, called the CMS demo plan a "fake, costly demonstration," in a recent analysis.
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"Fearing the premium increases that the IRA redesign will impose on Part D plans, CMS has now launched a new voluntary, nationwide demonstration program that is neither a demonstration nor voluntary. Unlike this massive subsidization scheme, demonstrations are supposed to be limited in nature and test alternative features of program design," the institute wrote. "As a result of the IRA changes, insurers that don’t participate are expected to either be uncompetitive from a price perspective or face significant losses – hardly a choice for insurers."
Research published by Fidelity, an investment research group, shows that a 65-year-old retiring today can expect to spend $165,000 on health care in retirement, a 5% increase from last year and more than double the estimate from 2002.
Yet, there appears to be a disconnect for many Americans between the actual projected cost of health care in retirement and how much they expect to spend on those expenses. The average American thinks they will spend about $75,000 on health care and other medical expenses, less than half of Fidelity's calculation, according to the research.
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The estimate assumes that an individual is enrolled in Medicare – including Part A and Part B, which cover most hospital care and doctor's visits – and Part D, which covers prescription drugs. Other expenses such as Medicare premiums, over-the-counter medications, dental and vision care and other costs typically not covered by Medicare are "left to retirees to manage on their own," the report said.
As of April 2024, about 67.3 million Americans were enrolled in Medicare, according to the Centers for Medicare and Medicaid Services. Of those, about half were enrolled in a Medicare Advantage plan, while about 80% were covered by Medicare Part D.
"They just want to get through the election," Grogan said. "They're hoping after the election they can face it, but its gonna need to be dealt with in the next 12–18 months. They did not believe it would be this bad and its only gonna get worse."
Americans are also dealing with a spike in the cost of prescription drugs, which has surged nearly 40% over the past decade, easily outstripping the pace of inflation.
Fox News Digital has reached out to CMS for comment.
Fox Business' Megan Henney contributed to this report.
